Circle Internet (CRCL) CEO Jeremy Allaire offered his clearest public response yet to growing criticism over how the stablecoin issuer handles illicit funds, saying it does not freeze wallets unless there is a formal legal basis to do so.
Speaking on stage at a press conference in Seoul, Allaire positioned USDC, the second-largest stablecoin pegged to the dollar, as a regulated financial product rather than a tool for real-time intervention.
“Circle has a very, very clear performance obligation under the law,” Allaire said. “Circle follows the rule of law and we may take actions such as freezing a wallet at the direction of authorities or the courts.”
Allaire framed USDC as part of the traditional financial system, subject to legal processes and oversight. Decisions to blacklist or freeze funds, he suggested, should not be made at the company’s discretion in the midst of an exploit, but should follow law enforcement requests or court orders. The approach reflects Circle’s broader strategy of aligning closely with regulators and institutions.
Rival Tether, the issuer of the world’s largest stablecoin USDT, has a more proactive approach. The company has repeatedly frozen funds related to piracy and illicit activities within hours. In several cases cited by blockchain sleuth ZachXBT, including exploits affecting Ledger and Remitano, Tether blacklisted the stolen funds, while the equivalent USDC remained intact.
Allaire’s comments come at a time of increasing scrutiny. Earlier this month, Drift Protocol suffered an alleged exploit linked to North Korea that resulted in losses of up to $280 million. Approximately $230 million worth of USDC moved across chains over several hours. The incident has become a focal point for critics who argue that Circle is failing to act despite having the technical capacity to do so.
The intervention also carries risks
ZachXBT is among the most vocal. In a widely circulated thread on He noted multiple incidents where stolen USDC remained in identifiable wallets for hours or even days without being frozen, including exploits that affected Cetus, SwapNet, and Nomad.
Critics say the pattern highlights a deeper problem. USDC is issued centrally and contains controls that allow Circle to block addresses. However, those powers are rarely used in real time. By bowing to legal processes that move much more slowly than blockchain transactions, they argue, Circle creates a loophole that attackers can exploit.
Others in the industry argue that faster intervention carries its own risks. Omid Malekan, an associate professor at Columbia Business School, responded to calls for discretionary freezes by warning that allowing issuers to act beyond legal requirements would undermine the foundations of decentralized finance (DeFi).
Malekan said such powers could erode trust in DeFi systems by introducing centralized control points.
“If Circle and other stablecoin issuers implement an arbitrary freeze or seize features beyond what the law requires, then not only is the code not law, but the law is not law,” he wrote in X. “Instead, what a single executive within a single corporation decides is law.”
